FDIC chair faces calls to resign after audit details toxic work culture at agency

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• Amna Nawaz:

  More than 100 million American households have money in bank accounts protected by the Federal Deposit Insurance Corporation, or FDIC.

  The agency's chairman, Martin Gruenberg, is now facing calls to resign.

  And, as Laura Barron-Lopez reports, his resignation could change the FDIC's plans for regulating banks — Laura.

• Laura Barron-Lopez:

  That's right, Amna.

  This all comes after a recent audit and major news investigation found serious problems with the FDIC's workplace culture, including pervasive sexual harassment, bullying, and discrimination on the basis of gender, race, and sexuality, all spanning a period of decades.

  Martin Gruenberg has spent the last two days trying to convince skeptical lawmakers on Capitol Hill that he should keep his job. But that didn't stop a bipartisan wave of anger and reprimands.

• Sen. Tim Scott (R-SC):

  The level of intimidation that is embed in the culture after a decade of your leadership, you can't just unravel it. You can't unscramble that egg.

  You have heard me say this to you directly. You should resign. Your employees do not have confidence in you.

• Laura Barron-Lopez:

  For more, we are joined by Rebecca Ballhaus, an investigative reporter who broke this story for The Wall Street Journal.

  Rebecca, thanks so much for joining the "NewsHour."

  You published a story in November of 2023 after speaking with more than 100 FDIC employees, including 20 women who quit their jobs because of the toxic culture at the agency. Can you give us a sense of what those women shared with you?

• Rebecca Ballhaus, The Wall Street Journal:

  Yes, it was really a pretty astounding period of talking to these women over many months.

  What I heard was just these horrifying descriptions of harassment they faced from their supervisors, which ranged from supervisors talking about going to strip clubs in front of them, supervisors talking about how women needed to sleep with people to get ahead at the FDIC, just the way that they spoke to women, talking about their appearances and making comments about their eligibility to be dated.

  It was just a lot of pretty horrifying stuff, but I think what really stood out to me in my reporting was — were some of the structural elements. So the way that the FDIC works with bank examiners is, it hires people directly out of college. So you're sending, in some cases, young women out into the middle of the country to conduct these bank exams.

  They're going out to visit the banks, often with mostly all-male teams. Their teams are often much older than them. And you can just see how a situation like that is going to be rife for that sort of conduct. And I think the fact that there wasn't much of — wasn't much in place to sort of guard against that really showed in the reporting.

• Laura Barron-Lopez:

  And that reporting led to the FDIC hiring an outside law firm to conduct a review, which finally came out last week.

  It corroborated your initial report. But did we learn anything more about the scope of these problems?

• Rebecca Ballhaus:

  I think what was really striking is just how many people the law firm heard from.

  So, as you said, I spoke to more than 100 people. The law firm heard from more than 500 people. And that was particularly notable for me because so many people had told me that they had a lot of reservations about going to the law firm, that there was a lot of concern that there could be retaliation if they shared their stories with the law firm.

  So the fact that they got that many people even with those fears is pretty amazing. And I think what the report really showed is just how widespread these issues were. I didn't really know going in whether the report would mostly confirm the examples that I had found or whether there would be a lot more there. And there were a lot of examples of harassment and discrimination beyond what I had collected that were really horrifying to read.

• Laura Barron-Lopez:

  When President Biden first took office, he told staffers and appointees that he would — quote — "fire them on the spot" if he ever found out that they treated anyone with disrespect or if they bullied anyone.

  And this report details that Chairman Gruenberg, as recently as last year, losing his temper in ways that employees felt were — quote — "offensive and inappropriate." Democrats grilled him these past two days, but very few of them have actually called on him to resign. Why?

• Rebecca Ballhaus:

  Yes, it's been pretty interesting to watch the reaction.

  And I think there's a pretty clear reason why, which is that if he were to resign or be ousted, it would leave the Republican vice chairman in charge of the FDIC, and it would mean that the board of the FDIC would be deadlocked. So Biden's regulatory agenda and the things that Gruenberg is trying to pass would not happen if — would likely not happen if Gruenberg were pushed out.

  And so I think it's — and a lot of Republicans made this point today, that it's a sort of political calculus by Democrats in not coming after Gruenberg harder. I think you did see a lot of Democrats on the House side be pretty harsh in their criticism.

  There are at least two House Democrats who now seem to be indicating that they would support him resigning and a couple others who said they had serious doubts. But I think, on the Senate side, you saw Democrats take a much more measured approach in the hearing.

• Laura Barron-Lopez:

  And Gruenberg apologized, saying he will change the culture, that he'd take an anger management course.

  What reaction, though, are you hearing? And do you think that he's done enough to save his job?

• Rebecca Ballhaus:

  I think it looks for now like his job is safe. I'm not — there may be other shoes to drop here. The House is investigating. They have been speaking to FDIC employees.

  The inspector general has said it's investigating. So more could come out on this. But absent additional political pressure from Democrats, I'm not sure what would force him out of his job now. But I think the way he will navigate his employees going forward is going to be interesting to watch, because I think a lot of them are incredibly appalled by the report, have been pretty angry for some time now and skeptical that the agency is going to take steps that will really change this culture.

  And I think what — you're talking about very entrenched problems that are not necessarily or at all attributable to one person. But I think changing a culture like that from the inside out can be a difficult challenge.

• Laura Barron-Lopez:

  That's Rebecca Ballhaus of The Wall Street Journal.

  Thank you for your time.

• Rebecca Ballhaus:

  Thanks for having me.